The case for modernising land tax administration
Land and property taxes are an important contribution to Scotland’s public finances, in 2024-25 they contributed £7.1 billion.2 However, this is not based on an up-to-date or complete picture of land value in Scotland. For example, 90% of land area (agriculture and woodland) is not assessed or included on the valuation roll and council tax is based on land values from 1991.3 Not only does this limit the potential for the tax system to be responsive to changing policy needs, but it also puts Scotland behind other countries that have complete and up-to-date records of land information where this provides a sound basis for multiple policy purposes including taxation. Tax policy significantly influences land use and ownership decisions, impacting the delivery of Scottish Government’s objectives for both. The Scottish tax system could better support productive and sustainable use of land and assets thereby playing a greater role in supporting a resilient economy, tackling inequality and addressing the environmental crises.
In 2021, the Scottish Land Commission identified ways in which existing devolved taxes could incentivise town centre regeneration and support land reform using reliefs, exemptions and devolving powers to local authorities.4 However, it recognised the limits of the current system and the need for overcoming practical barriers linked to data, methods and capacity.5 Such practical hurdles are also regularly identified in debates around land value taxation.6
In 2026 the Commission published advice following Ministers’ commitments to consider options for a carbon land tax and options for tax to support wider land policy. It found that for reforms to be viable and effective, there are specific practical implementation issues that need to be addressed, including in the land data and tax administration system.
